Kerala High Court in the case of K.K. Ibrahim v. Cochin Kagaz Ltd discusses the issue that when a sole arbitrator is appointed in a matter of arbitration, the courts cannot intervene.
In the instant case, the appellant purchased some scrap and types of machinery from the respondent company under Memorandum of Understanding (MoU) dated 31-01-2017. Although the appellant paid a substantial amount, some amount was still outstanding towards the purchase price. The appellant claimed that some of the goods kept in the disputed land were yet to be removed. The appellant contended that the respondent had withheld the goods and proposed to sell them along with the disputed land. It was stated that the appellant had suffered a considerable loss due to the alleged breach of contract committed by the respondent.
Stand taken by the respondent was that all the goods purchased by the appellant were already removed from the premises, and some amount towards the value of goods was outstanding due. The respondent set up a rival claim of loss and sought damages from the appellant.
The appellant contended that until the Arbitral Tribunal determines the claim for damages, the disputed land, types of machinery, etc., had to be kept intact. Otherwise, the appellant might not be able to recover the claimed loss from the respondent. The appellant submitted that the court below refused to grant reliefs in respect of the scrap and types of machinery only because they were not scheduled in the petition. Therefore, the matter may be remitted back to the Court below, and the appellant may be allowed to incorporate the property in the original petition.
The respondent argued that the appellant had not made out any prima facie case. Also, the Court below had dismissed the Original Petition (Arb) on the ground that the appellant suppressed the material facts. Regarding physical possession of the land, the respondent had already approached another Bench of this Court seeking liberty to be reserved for the sale of the property to settle its liabilities. The respondent opposed the prayer for remittance of the case to the Court below and contended that sole Arbitrator had already been appointed after the impugned order was passed, there is a legal bar under Section 9(3) of the Arbitration and Conciliation Act, 1996 (“the Act”) which precludes the court below from granting any interim measure of protection.
The Court opined that attachment of land as sought by the appellant could not be granted as the said land had already become the secured asset of Edelweiss Asset Reconstruction Company, Mumbai. Under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2016 (“SARFAESI Act”), the physical possession of the property was already taken over by Chief Judicial Magistrate. Because of the appointment of sole Arbitrator, the Court said that it is up to the learned Arbitrator to consider the question as to whether the appellant would be entitled to claim any interim measure of protection under Section 17 of the Act.
 2020 SCC OnLine Ker 7755.
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